BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2564


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          Date of Hearing:  May 11, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          AB  
          2564 (Cooper) - As Amended April 20, 2016


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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:


          This bill requires the California Air Resources Board (ARB), in  
          consultation with the California Energy Commission (CEC), to  
          adopt regulations to establish eligibility for the Clean Vehicle  
          Rebate Project (CVRP) based on income levels. Specifically, this  








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          bill:  


          1)Increases rebate amounts by $500 per rebate for consumers with  
            household incomes less than or equal to 300% of the federal  
            poverty level.  Increased rebate amounts are available for  
            fuel-cell electric vehicles, battery electric vehicles, and  
            plug-in hybrid electric vehicles. 

          2)Limits CVRP eligibility to income of $125,000 for single  
            filers, $170,000 for head of household, and $250,000 for joint  
            filers. Excludes fuel cell electric vehicles from the income  
            limit.


          3)Requires outreach to low-income households and prioritizes  
            rebate payments for low-income consumers.



          FISCAL EFFECT:


          1)Increased initial costs of $150,000 to $250,000 (Air Quality  
            Improvement Fund) per year for two years for ARB to adopt  
            regulations to implement CVRP eligibility modifications and  
            prioritizations. 



          2)Unknown, future and ongoing costs for ARB to update the CVRP  
            program by regulation to reflect current market conditions.



          3)Unknown, increased costs for ARB to provide outreach to  
            low-income households.
          COMMENTS:









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          1)Purpose. This bill implements recommendations from an ARB  
            discussion document.  These recommendations include increasing  
            awareness about CVRP by requiring outreach in disadvantaged  
            communities and prioritizing rebates payments for low-income  
            consumers.  This bill goes beyond ARB recommendations and  
            increases rebates for consumers with household incomes less  
            than or equal to 300% of the federal poverty level.   
            Additionally, this bill lowers the CVRP income limits to  
            $125,000 single filer, $170,000 for head of household, and  
            $250,000 for joint filers. 


            


          2)Background.  In 2007, AB 118 established three new programs  
            intended to promote vehicle and fuel technology that reduces  
            air pollution and GHG emissions statewide.  These programs are  
            the Air Quality Improvement Program (AQIP), the Enhanced Fleet  
            Modernization Program (EFMP) and the Alternative Renewable  
            Fuel and Vehicle Technology Program (ARFVTP).
             
             AQIP provides financial incentives for public and private  
            groups and individuals to adopt smog and diesel particulate  
            pollution reducing technology that concurrently reduces GHG  
            emissions.  Two of AQIP's flagship projects, CVRP and the  
            Hybrid and Zero Emissions Truck and Bus Voucher Incentive  
            Program (HVIP) represent the program's largest funding  
            commitments.  AQIP has also provided incentives for biofuels  
            research, hybrid truck testing, lawn and garden equipment  
            replacement, zero-emission all-terrain agricultural work  
            vehicle rebates, advanced technology demonstration, and hybrid  
            off-road equipment pilot projects.  CVRP provides rebates for  
            ZEV and NZEV, including plug-in hybrid vehicles, battery  
            electric vehicles, fuel cell electric vehicles, and  
            neighborhood electric vehicles.

            The demand for CVRP has steadily increased over time and  








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            surpassed funding available through AB 118.  Originally, the  
            funding gap was covered with loans from various funds.  In the  
            2014-15 Budget Act, $200 million was appropriated to AQIP from  
            the GGRF.  Last year, CVRP was one of the few non-continuously  
            appropriated programs to receive an appropriation from GGRF.   
            Despite that, CVRP may still run out of funding prior to the  
            enactment of this year's budget, and the administrator may  
            need to establish a wait list. 


            To date, CVRP has spent over $300 million ($160 million from  
            AB 32 cap-and-trade revenues) to provide over 142,000 rebates.  
             ARB proposes to spend an additional $230 million on CVRP from  
            the $500 million requested appropriation for low carbon  
            transportation and fuels in the Governor's 2016-17 fiscal year  
            budget. 


            
          3)Recent Legislation.  As CVRP expenditures have grown, there  
            have been concerns about the equity of the program and its  
            cost effectiveness.  These equity issues were recognized when  
            the Legislature passed SB 1275 (de León), Chapter 530,  
            Statutes of 2014, which established the Charge Ahead  
            California Initiative to increase access to ZEVs and NZEVs for  
            lower income Californians and disadvantaged communities.  SB  
            1275 also required eligibility to be limited based on income.   
            In response to SB 1275, ARB, on March 28, 2016, set an income  
            cap of: a) $250,000 for single filers; b) $340,000 for  
            head-of-household filers; and c) $500,000 for joint filers.   
            Additionally, rebate amounts will be increased by $1,500 per  
            rebate for consumers with household incomes less than or equal  
            to 300% of the federal poverty level. This bill modifies both  
            the income eligibility and rebate amounts established by SB  
            1275.


            









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          Analysis Prepared by:Jennifer Galehouse / APPR. / (916)  
          319-2081